This quarterly report on Form 10-Q and other reports filed by Amanasu
Environmental Corporation and its wholly owned subsidiaries, collectively the
"Company", "we", "our", and "us") from time to time with the U.S. Securities and
Exchange Commission (the "SEC") contain or may contain forward-looking
statements and information that are based upon beliefs of, and information
currently available to, the Company's management as well as estimates and
assumptions made by Company's management. Readers are cautioned not to place
undue reliance on these forward-looking statements, which are only predictions
and speak only as of the date hereof. When used in the filings, the words
"anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or
the negative of these terms and similar expressions as they relate to the
Company or the Company's management identify forward-looking statements. Such
statements reflect the current view of the Company with respect to future events
and are subject to risks, uncertainties, assumptions, and other factors,
including the risks contained in the "Risk Factors" section of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed
with the Securities and Exchange Commission ("SEC") on March 30, 2020 (the
"Annual Report"), relating to the Company's industry, the Company's operations
and results of operations, and any businesses that the Company may
acquire. Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended,
or planned.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. Except as required by
applicable law, including the securities laws of the United States, the Company
does not intend to update any of the forward-looking statements to conform these
statements to actual results.
Our unaudited condensed consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States
("GAAP"). These accounting principles require us to make certain estimates,
judgments and assumptions. We believe that the estimates, judgments and
assumptions upon which we rely are reasonable based upon information available
to us at the time that these estimates, judgments and assumptions are
made. These estimates, judgments and assumptions can affect the reported amounts
of assets and liabilities as of the date of the consolidated financial
statements as well as the reported amounts of revenues and expenses during the
periods presented. Our consolidated financial statements would be affected to
the extent there are material differences between these estimates and actual
results. In many cases, the accounting treatment of a particular transaction is
specifically dictated by GAAP and does not require management's judgment in its
application. There are also areas in which management's judgment in selecting
any available alternative would not produce a materially different result. The
following discussion should be read in conjunction with our consolidated
financial statements and notes thereto appearing elsewhere in this report.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company had a working capital deficiency of $690,726 and an accumulated
deficit of $5,517,781 at September 30, 2020, and a record of continuing losses.
These factors, among others, raise substantial doubt about the ability of the
Company to continue as a going concern. The financial statements do not include
adjustments relating to the recoverability of assets and classification of
liabilities that might be necessary should the Company be unable to continue in
operation.
The Company's present plans, the realization of which cannot be assured, to
overcome these difficulties include, but are not limited to, a continuing effort
to investigate business acquisitions and joint ventures. The Company will also
continue to investigate and develop technologies, which the Company believes
have great market potential. As such, the Company may need to pursue additional
sources of financing. There can be no assurances that the Company can secure
additional financing.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
General
Management's discussion and analysis of results of operations and financial
condition is intended to assist the reader in the understanding and assessment
of significant changes and trends related to the results of operations and
financial position of the Company together with its subsidiary. This discussion
and analysis should be read in conjunction with the consolidated financial
statements and accompanying financial notes, and with the Critical Accounting
Policies noted below.
Plan of Operation
The Company has three main objectives. Firstly, the Company will continue in its
goal to meet the capital objective of $30,000,000. Currently the company is
exploring various potential investment partners in Japan, as well as China. The
Company cannot predict whether it will be successful with its objective. Second
the Company will continue to support Amanasu Maritek Corporation's efforts on
entering into marine technologies. The Company will assist for another 2 years
in the design, and approval process for the product from at least two regulatory
bodies: the Japanese Government, and the IMO (International Marine
Organization). This approval process requires capital for additional product
testing, documentation, and documentation translations. The Company believes
that Amanasu Maritek Corporation's most significant hurdle will be in capital
raising. The Company has already initiated documentation and application
processes, and is now looking for capital to fund the project. The Company
cannot predict whether it will be successful with its capital raising efforts.
Third, the Company is making plans to enter the reforestation industry in Japan,
through Amanasu Maritek Corporation. The Company must first reach an agreement
with the relevant government agencies in Japan. The Company intends to focus on
the prefectures of Miyagi, Iwate and Niigata and begin operations within two
years. The Company cannot predict whether it will be successful with its
objective.
The Company's operations may be affected by the recent and ongoing outbreak of
the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a
pandemic by the World Health Organization. The ultimate disruption which may be
caused by the outbreak is uncertain; however, it may result in a material
adverse impact on the Company's financial position, operations and cash flows.
Possible areas that may be affected include, but are not limited to, disruption
to the Company's ability to obtain funding and performing further research on
certain projects.
Results of Operations
There were no revenues for the three and nine months ended September 30, 2020
and 2019.
General and administrative expenses decreased $244 (2.0%) and $1,607 (3.4%) to
$12,054 and $46,404 for the three and nine months ended September 30, 2020,
respectively, as compared to $12,298 and $48,011 for the three and nine months
ended September 30, 2019. These decreases are mostly attributed mostly to the
lower travel expenses.
As a result of the above, the Company incurred loss from operations of $12,054
and $46,404 for the three and nine months ended September 30, 2020,
respectively, as compared to losses from operations of $12,298 and $48,011 for
the three and nine months ended September 30, 2019, respectively.
For the three and nine months ended September 30, 2020, interest expense
increased $50 and $595 to $5,032 and $14,956, respectively, as compared to
$4,982 and $14,361 for the three and nine months ended September 30, 2019,
respectively, as a result of the increased interest associated with additional
advances from stockholders.
As a result of the above, the Company incurred net losses of $17,086 and $61,360
for the three and nine months ended September 30, 2020, respectively, as
compared to $17,280 and $62,372 for the three and nine months ended September
30, 2019, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
Total current assets at September 30, 2020 were $71 as compared to $24,720 at
December 31, 2019. This decrease is the result of the decrease in the amount due
from affiliate.
Total current liabilities as of September 30, 2020 were $690,797 as compared to
$653,222 at December 31, 2019.This increase is primarily due to increases in
accrued interest to related parties and accrued interest.
The Company's minimum cash requirements for the next twelve months are estimated
to be $60,000, including rent, audit and professional fees. The Company does not
have sufficient cash on hand to support its overhead for the next twelve months
and there are no material commitments for capital at this time other than as
described above. The Company will need to acquire debt or issue and sell shares
to gain capital for operations or arrange for additional stockholder or related
party loans. There is no current commitment for either of these fund sources.
Our working capital deficit increased $62,224 to $690,726 at September 30, 2020
as compared to $628,502 at December 31, 2019 primarily due to increases in and
accrued expenses and accrued interest to related parties.
During the nine months ended September 30, 2020, the Company had a net decrease
in cash of $140. The Company's principal sources and uses of funds were as
follows:
Cash used in operating activities. For the nine months ended September 30, 2020,
the Company used $28,873 in cash for operations as compared to using $17,744 in
cash for the nine months ended September 30, 2019, primarily as a result of the
change in accrued expenses - related parties.
Cash provided by financing activities. Net cash provided by financing activities
for the nine months ended September 30, 2020 was $28,733 as compared providing
$14,660 for the nine months ended September 30, 2019 primarily as a result of
the increase in amounts due from related parties.
OFF-BALANCE SHEET ARRANAGEMENTS
The Company has no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
The Company prepares its financial statements in accordance with accounting
principles generally accepted in the United States of America. Preparing
financial statements in accordance with generally accepted accounting principles
requires the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities as of the date of the financial statements and the reported amounts
of revenue and expenses during the reported period.
Our critical accounting policies are described in the Notes to the Financial
Statements included in our Annual Report on Form 10-K for the year ended
December 31, 2019, as filed with the SEC on March 30, 2020 (the "Annual
Report"). There have been no changes in our critical accounting policies. Our
significant accounting policies are described in our notes to the 2019
consolidated financial statements included in our Annual Report.
RECENTLY ISSUED ACCOUNTING STANDARDS
No recently issued accounting pronouncements had or are expected to have a
material impact on the Company's condensed consolidated financial statements.
© Edgar Online, source Glimpses